Saudi Price War Cannot Impede Iran Oil Growth

Saudi Price War Cannot  Impede Iran Oil GrowthSaudi Price War Cannot  Impede Iran Oil Growth

Saudi Arabia oil officials have started a new price war to impede Iran's progress in achieving its pre-sanctions oil output.

Addressing newly-elected lawmakers in a panel named "Making Laws, Obligations and Strategies", Oil Minister Bijan Namdar Zanganeh said, "Unlike international norms, which call for showing respect to other competitors, Saudi officials contact our potential customers to dissuade them from signing contracts with us by offering lower prices," ISNA reported.

Pointing to the Saudi oil production level of 10 million barrels per day, the official noted that Iran has no choice but to raise its output to a minimum 4 million bpd to have a say in the market.

Zanganeh believes that there is a direct link between Iran's regional power and its oil production level that can be easily boosted, in view of the enthusiasm shown by foreign investors to play a role in Iran's untapped energy market.

According to the oil minister, accomplishing the objectives of Iran's sixth economic development plan (2016-21) in the oil sector, including the development of South Pars phases and implementation of petrochemical plans, requires an investment of $200 billion, which explains why the attraction of foreign financial resources, with the help of Majlis, tops the ministry's priority list.

Zanganeh added that when the incumbent government took office, Iran's oil output stood at less than a million bpd and there was a serious shortage of natural gas in some regions.

"Nonetheless, our production level has already reached 3.5 million bpd," he said.

Referring to major achievements in the oil sector after the implementation of the nuclear deal between Iran and world powers, the minister said, "We managed to restore a big portion of our lost market share despite the desperate attempts of Saudis via psychological warfare to preclude us from reaching our goal."

On the South Pars construction projects, Zanganeh said the National Iranian Oil Company has managed to make six new phases operational and plans have been made to develop five more phases by the yearend.

  No Marketing Problem

According to Amir Hossein Zamaninia, the deputy oil minister for international affairs and trade, the Persian Gulf country has no problem selling oil or attracting new customers.

Asked about meeting probable challenges with respect to the sudden increase in the country's oil output in the coming months, Zamaninia noted that marketing management analytics show that selling 2.4 million barrels of oil per day will not pose a serious challenge for NIOC.

Highlighting serious negotiations with international companies, including those from India, the official said, "India's oil import from Iran has experienced a rise, yet we do not barter oil with commodities anymore. Moreover, serious talks are underway with Indians to commission the development of Farzad B Gas Field to them."

On money transfer problems from South Korea to Iran to clear oil debts, Zamaninia added that the southeastern Asian state is grappling with domestic banking problems, which has nothing to do with the two countries' banking relations.

  Joining Oil Freeze Deal

Seyyed Mohsen Qamsari, NIOC's director in charge of international affairs, has already said Iran has already reached the desirable oil output level to proceed with freezing its production.

Qamsari said Iran’s current oil production, based on OPEC calculations, stands at around 4.2 million bpd by considering the daily production of 500,000 bpd of condensates.

“Accordingly, the desirable figure for the oil minister has been reached and we can join the oil freeze plan,” he has been quoted as saying by Tasnim News Agency. Nevertheless, the official emphasized that the decision to join the plan should be taken by the oil minister.

The oil freeze plan raised by key OPEC and non-OPEC producers requires the global production of oil to remain at January levels. The plan is meant to boost prices that have fallen 65% since peaking in June 2014 due to oversupply.

Iran had so far rejected the call to freeze its output as unfair and emphasized that it will go ahead with its plans to increase oil production.

Nevertheless, it had made it clear that it is ready to join the plan after its output reaches 4 million bpd.